Haddon Township NJ 08108                                                           609-332-4918                           JSilvagni@MauiWealthSolutions.com                                                 .

On a scale of 1 to 10, with 1 being the most important and 10 the least; How important is implementing tax-avoidance into your overall financial plan?.....

...What steps have you taken in this regard?....

 

What is the difference between tax-deferred and tax-free?

In summary, tax-free means you paid the taxes on the initial investment today but you don't have to pay taxes on earnings or withdrawals, while tax-deferred means you postpone taxes until a later date when you withdraw the funds. The majority of people would like to avoid or greatly reduce taxes at retirement. Creating an efficient tax-avoidance strategy can be a key factor in your financial plan. 

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Simply, it is either paying tax on your income now or later in retirement. Which is the best way to structure your plan? 

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There are different paths to take to create your retirement income streams, below are some of the most common tax-free and tax deferred vehicles used. 

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Understanding what is the right income creating tool is for your financial road map, starts with learning what is available.

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Tax-free vehicles:

• Roth IRA 

• Roth (401k,403b)

• Cash Value life insurance - IUL (Indexed Universal Life Insurance) 

• 529 (unless not used for qualified education expenses)

• Municipal bonds (generally are but may have exceptions depending on situation)

 

Tax-deferred vehicles:

• Traditional IRA

• 401k

• 403b

• Annuities

• Pensions

• Real Estate (some exceptions may apply)

• Long-Term Capital Gains

The specific rules and regulations governing tax-free and tax-deferred accounts may vary depending on your jurisdiction and the type of account or investment involved.

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Connect with me today to discuss the strategies that may fit best in your financial plan.